Reinventing your business model article PDF

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Reinventing your business model article 

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Apple took great technology and wrapped it in a great business model. That’s why they were a top company in selling iPods. They combine hardware, software (downloading music), and service. Business model innovation has helped business grow into fortune 500 company. Why is it so difficult to pull off the new growth that business model innovation can’t bring? 1. Lack of definition: very little formal study has done into the dynamics and processes of business model development. 2. Few companies understand their existing business model well enough-the premise behind its development, its natural interdependencies, and its strengths and limitations. Three steps for road mapping 1. Thinking about the opportunity to satisfy a real customer who needs a job done 2. Construct a blueprint laying out how you company will fulfill that need at a profit. 3. Compare that model to your existing model to see how much you’d have to change it to capture the opportunity Business model: consist of 4 interlocking elements that, taken together, create and deliver value. (first one is the most important) 1. Customer value proposition (CVP)- successful business has found a way to create value for customers. Once we know the job that needs to be done we can design an offering. 2. Profit formula – this defines how the company creates value for itself while providing value to the customer. consist of revenue model, cost structure, margin model, resource velocity. 3. Key resources – assets such as people, technology, and products. Focus on key elements that create value for customer and the company. 4. Key processes – successful companies have operational and managerial process that deliver value that are repeatable. Like recurrent task like training, development, manufacturing, budgeting, etc.

How great models are built?  Creating a customer value proposition – first identify a clear customer value proposition. The most important attribute of a customer value proposition is its previsions ( how perfectly it nails the customer job to be done. Barriers keeping people from getting particular jobs done are insufficient wealth, access, skill, or time.  Designing a profit formula – example getting people into cars and not scooters, youd want to drastically decrease the price of the car.  Identifying key resources and processes – having to articulated the value proposition for both the customer and the business, companies must consider key resources (people) and processes needed to deliver that value. Oftentimes it’s the relationship between individual resources and processes. When a new business model is needed?

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When significant changes are needed to all four elements of your existing model. 5 strategic circumstances that often require business model change: 1. Opportunity to address through disruptive innovation the needs of large groups of potential customers who are shut out of a market entirely because existing solutions are too expensive or complicated. 2. To capitalize on a brand-new tech by wrapping a new business model around it or the opportunity to leverage a tested tech. by bringing it to a whole new market. 3. The opportunity to bring a job to be done focus where one does not yet exist. This allows them to look into profitability 4. The need to fend off low-end disrupters. 5. The need to respond to a shifting basis of competition....